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Fufeng Announces 2008 Interim Results With Strong Sign of Recovery

Turnover Increased by 45.7% Profit Attributable to Shareholders Increased Significantly by 161.7%

HONG KONG, Aug. 14 /Xinhua-PRNewswire/ -- Fufeng Group Limited ("Fufeng" or "the Group"; HKEx: 546), a leading vertically integrated manufacturer of corn-based biochemical products in China, today announces its interim results for the six months ended 30 June 2008.

During the period under review, driven by the increased sales volume and selling price of major products, the Group's turnover increased to RMB1,630.4 million, representing an increase of 45.7%. The Group's gross profit increased by 108.3% to RMB237.7 million, profit attributable to shareholders significantly increased by 161.7% to RMB85.9 million. The earnings per share for the 1H of 2008 amounted to RMB 5.17 cents.

Commenting on the results, Mr. Li Xuechun, Chairman of Fufeng said, "After the market downturn in 2007, the Group's results in the 1H of 2008 have shown a strong sign of recovery. During the period under review, we increased sales volume and enlarged market share in MSG market. As for xanthan gum, the Group successfully captured additional market share by capacity expansion and competitive selling price."

The Group's two major business segments showed a strong sign of recovery. In the 1H of 2008, the ASP of the Group's major products in the MSG segment has rebounded completely. The sales volume of glutamic acid also increased by 15.6% in the 1H of 2008 from that of 2007. With the Group's strategy of moving from glutamic acid to MSG, the sales volume of MSG continued to increase by approximately 11.5% in the 1H of 2008.

During the period, the sales volume of xanthan gum increased by 247.9% to 7,831 tonnes while the sales amount increased by 196% to RMB168.7 million. The gross profit of xanthan gum also increased by 183% to RMB57.2 million. The ASP of xanthan gum decreased by 14.8% to RMB21,547 per tonne in the 1H of 2008. However, the gross profit ratio maintained at high level with a slight adjustment of 1.6 % pts in the 1H of 2008.

Talking about the Group's future strategies, Mr. Li said, "It is expected that the market consolidation in MSG market will continue in the 2H of 2008. Then the supply of MSG products will be further stabilised and therefore the price will be maintained at the high level. The sales volume of the Group's MSG is expected to increase following the commencement of production of the Group's 70,000 tonnes new MSG plant in October 2008. We will further lower production cost of MSG segment after part of the reengineering project of MSG segment in Inner Mongolia Plant completed in early August and increase an annual production capacity of glutamic acid of 40,000 tonnes in late 2008. Furthermore, the reallocation and reengineering of the Junan Plant I to Baoji Plant and IM Plant will increase the annual production capacity of glutamic acid of 40,000 tonnes, MSG of 20,000 tonnes, and fertilizers of 100,000 tonnes in late 2008. Meanwhile, we believe that the xanthan gum market supply will further stabilise in the 2H of this year whilst the demand will grow for more customers realize the advantages of the products. As xanthan gum production consumes less corn kernel, and our Inner Mongolia Plant enjoys low coal cost advantage, our production cost will decrease as we expand xanthan gum production in the Inner Mongolia. As scheduled, the additional xanthan gum production capacity of 10,000-tonne in the Inner Mongolia will be commenced in the end of 2008. By then, the Group will have xanthan gum production capacity of 28,000 tonnes, and will become one of the major xanthan gum manufacturers in the world.

"We will further consolidate and strengthen our leading position in the MSG market and xanthan gum segment by leveraging our competitive strengths. Besides, we will further develop new value added products along the production chain, like corn oil and chicken powder. Our ultimate goal is to become a leading corn-based biochemical product manufacturer in China and deliver satisfactory returns for our shareholders." Mr. Li concluded.

For more information, please contact:

iPR Ogilvy Ltd.

Stella Lui

Tel: +852-2136-6178


SOURCE Fufeng Group Limited
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